The administration is also seeking to overhaul key elements of federal financial aid. The spending proposal would maintain funding for Pell Grants for students in financial need, but it would eliminate more than $700 million in Perkins loans for disadvantaged students; nearly halve the work-study program that helps students work their way through school, cutting $490 million; take a first step toward ending subsidized loans, for which the government pays interest while the borrower is in school; and end loan forgiveness for public servants.
The loan forgiveness program, enacted in 2007, was designed to encourage college graduates to pursue careers as social workers, teachers, public defenders or doctors in rural areas. There are at least 552,931 people on track to receive the benefit, with the first wave of forgiveness set for October. It’s unclear how the proposed elimination would affect those borrowers.
The administration also wants to replace five income-driven student loan repayment plans with a single plan.
That change would likely benefit many undergraduate borrowers, who currently can have the balance of their loan forgiven after paying 10 percent of their income for 20 years. Trump’s proposal — which makes good on a campaign promise — would raise the maximum payment to 12.5 percent of income, but shorten the payment period to 15 years.
The proposal is less sweet for borrowers who take out loans to earn advanced degrees. They currently pay monthly bills capped at 10 percent of income for 25 years. Under the new plan, they’d pay more (12.5 percent of income) for longer (30 years).
This is...bad, no?